Ensure govt grants are used for real innovations

Government grants like the Productivity and Innovation Credit and Innovation and Capability Voucher are often used to subsidise essential business expenses in the name of productivity improvement.

These companies then purchase devices that replace humans. Jobs are eliminated, reducing the need for importing low-skilled labour. The business realises financial gains quickly, rather than in a year or two.

Should tax payers be subsidising essential business expenses?

If cashflow is an obstacle to the renovation of essential business functions or the development of new capabilities, alternatives such as loan schemes are available.

More thought needs to be given to qualifying expenses under the productivity and innovation schemes, espeically the qualification of fairly basic information technology and electronics.

If we agree that motor vehicles, once an "innovative" and "productivity enhancing" way to move goods around, no longer qualify, perhaps the Government should review the inclusion of items like websites (usually Wordpress or Drupal), laptops and printers.

Policy-level coordination is needed to manage outcomes.

It would be good to take a step back and consider whether taxpayer money may be better deployed in different ways to benefit the industry and support Singapore's relevance to the world.

Jeremy Chen Weirong

A version of this article appeared in the print edition of The Straits Times on July 20, 2017, with the headline 'Ensure govt grants are used for real innovations'. Print Edition | Subscribe